What to do if about to start FT at UBS?

I will keep a lookout for other opportunities if I were you. Regardless of what people on this board tell you (that UBS is too big to fail, and will always be a BB blah blah blah - that kind of shit obviously comes from UBS analysts), UBS IBD is now fraught with uncertainty.

That bank's like a black hole now. A few months ago, there were saying that IBD is a core part of their business. Now they are saying that IBD will be reduced substantially in size and product lines. Who knows what happens in a few more months? Maybe shut the entire IBD down with pink slips all around?

One of my friends who's going to be FT at UBS LA is looking around right now just in case. I honestly don't know whether he's being smart or paranoid.

Based on UBS' recent statements, it's difficult to pinpoint what exactly they mean when they reference "the investment bank." When UBS references its investment bank, it is talking about IBD** AND all the capital markets functions (S&T, prime brokerage, derivatives, etc...)The wording leads me to believe that the proposed withdrawal from "investment banking" actually means:
- put the brakes on proprietary trading
- partially/entirely withdraw from structuring exotic fixed income products
- reduce IBD headcount to match the decline in market-wide dealflow (as all banks are doing)

**To be clear, I'm using the term "IBD" to describe sector coverage, M&A advisory, and equity/debt/levfin/etc product activity.

To address the OP's question: I'm not sure who on this forum is interpreting UBS' treatment of "IBD" vs "Investment Banking" correctly. Delirium2 is correct to point out that there is clearly a shitshow at UBS right now. However, think the most recent announcements signal substantial layoffs in trading and structuring functions but seem to indicate that IBD sector/product activity (what your friend will find at UBS LA) will experience milder layoffs.

Bury Bonds, I could not agree more that it sounds like they realize their losses stemmed from a small part of the business, and they are going to pull back on that. They surely understand that doing IPO and M&A work is profitable for them.

But I wonder how much dealflow will slow if they get worse about using capital to attract business (why Moelis left), or about underwriting debt deals. And also, how a spinoff would affect an analysts' experience there. Do you think that 2 years down the road, PE firms and HFs will still look favorably upon UBS analysts, and realize that it was just unlucky timing?

Another thing: I don't think a spinoff of the bank would be too bad for bankers if done properly and good leadership is put in place. But what are the chances it is sold to a competitor BSC-style?

Any and all opinions are appreciated.

Those are questions that I obviously don't have concrete answers for. My comments:

re: Dealflow and capital usage
If I recall correctly, the one place they seemed over-reluctant to deploy capital was leveraged loans. That decision turned out for the best. Using capital to win deals will still go on. For example, the recent KCI/LifeCell deal ($1.7B) was a cash deal and I'll bet that a decent chunk of JP Morgan's change was involved somewhere along the way. However, this is nothing like last year when banks were effectively buying league table cred via massive levfin commitments (if you want a neat example, read up on the package Credit Suisse offered in the hopes of attracting a rival bidder for TXU last year). If your friend is joining a group that has a strategic M&A focus (as opposed to sponsor-driven/financial M&A), then he probably has less to worry about.

re: Spinoff
I don't work there, so I am only going by what I read. The consensus seems to be that the investment bank could not be carved out because it wouldn't be adequately capitalized. Divesting it to competitor is probably impossible at the moment given that it would require substantial appetite and funding on the part of the buyer (neither of which seem to exist right now).

re: Exit opps
If the analysts are still getting decent deal experience, I would venture to guess that opps will not be massively compromised in the near future.

A rumor that I heard from several senior people is that HSBC is involved with Olivant. Nobody knows to what extent. Whether their role is simply as a generic prime broker or whether they have some sort of interest in parts of UBS remains to be seen.

A good deal of people at UBS are taking a look at their options. I said it yesterday, but I'll say it again. Uncertainity at the bank makes it extremely hard for them to retain and recruit talent. Yes, it is a horrible job market right now, but everyone on all levels are checking out their options.

I agree with Bury_Bonds in that the "Investment Bank" and IBD are quite different. Headcounts will be reduced, but the severity will depend on the divisions and its contribution to the current situation.

One last note: There was a good deal of reaction to Rohner's comment that the PW/AM/CB would no longer subsidize/finance the operations of the IB. Many people took that to mean a seperation or a major cut in products. If you read UBS report on their subprime losses published on Monday you will understand how the losses were created. Basically (I am not a trader) it was a carry trade financed by a low cost of funds (swiss deposits..ect) which bought higher yielding but risk free assets (by selling the first 2% of losses) and immediately generated profit at a risk free return (cough cough LTCM). They did this on such a huge scale and over several divisions and managed credit but not market risk, and this was their main flaw. From what I took of it, this scheme was being shot down by Rohner in his comments and does not nessecarily mean as draconian cuts as some believe.

are you saying that industry groups would likely to be better off?